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Monday, November 10, 2008

Gotcha Financing..

Well as soon as we asked the realtor that listed this unfinished house about the owner possibly financing some of it- she offered to write us an offer that included a ballon payment!

No way.

That's my response period.

I know that its bad enough to finance a thing but to have a balloon payment due is the worst thing ever--its like the most likely way to get yourself in deep.

Here's what happens--you get to where the balloon payment is due and you don't have the money--so you end up refinancing and they talk you into borrowing even more--or the interest rates have gone up tremendously and you end up paying more of that when you refinance.

Another interesting thing--80% of mortgages that have balloon payments also have pre-payment penalties. In that case--you DO have the money to pay it off--so they charge you for it!

Yup--these are the things that make me mad.

Perhaps the seller would like a smaller offer is my thought--we can start there instead of at the owner financing idea.

I think the property would be hard to finance with a bank in its current state so perhaps the seller will be motivated to talk about it. --Assuming we decide we definitely want it.

It is best to do your homework and pass on a few place than to get yourself in a bad situation that may end get worse in time.

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